Until recently, few outside the intelligence community had heard of the “five eyes” alliance of the US, Canada, the UK, Australia and New Zealand. But since Britain left the European Union on 31 January, it has been suggested that these countries, already co-operating deeply on defence and intelligence, could form the basis of a powerful new trading bloc.
Sometimes known as the Anglosphere, on account of their common use of the English language, these five nations are all advanced economies with political stability and the rule of law.
Perhaps best of all, from the British perspective, is that, unlike the EU, they harbour no ambitions, as far as anyone is aware, to create a common currency. Which is probably a good thing, given divergent performances among the five denominations in their exchange rates against the euro.
Rock steady performance
Both the US and UK have seen mixed performances against the single currency during the past year. The dollar is currently trading at €0.8923, having been €0.9173 a month ago, on 22 May, and €0.9322 three months ago, on 23 March.
Trade Euro / US Dollar CFD
A year ago, on 24 June 2019, it stood at €0.8773, thus today’s level is a little higher than this but, in the interim, the rate has been higher still.
Sterling has lost ground during the last 12 months, from €1.1175 on 25 June 2019 to €1.0742 on 23 March back up to €1..1160 on 22 May and now at €1.1081.
By contrast, the remaining three currencies have been rock-steady against the euro. The Canadian dollar is currently at the same level as on 22 June 2019, €0.66, having been €0.64 on 23 March and €0.65 on 22 May.
The Australian dollar stood at €0.61 on 23 June 2019, the same level as today. On 24 March it was down at €0.55 and on 22 May it was worth €0.60.
More in common than not
Similarly, the New Zealand dollar traded at €0.58 on 22 June 2019, as it does today. It changed hands at €0.53 on 23 March and €0.56 on 22 May.
Currency divergence among these five economies is nothing new. From the Thirties until the Sixties, Australia and New Zealand belong to the sterling area currency bloc as, of course, did the UK, Canada never joined, instead preferring to remain within the orbit of the dollar.
But the similarities among the “five eyes” countries are, in some ways, greater than the differences. Britain, Canada and the US are members of the Group of Seven leading nations, and all plus Australia are members of the Group of 20 major economies. All use the English legal system with the exceptions of Quebec in Canada and Scotland in the UK, and all broadly share a belief in market economies, democratic elections and rules-based international trade.
However, don’t expect currency union or even fixed exchange rates any time soon. After all, they’re the sort of thing Britain is etting away from.